CACI No. 4109. Duty of Disclosure by Seller’s Real Estate Broker to Buyer
Judicial Council of California Civil Jury Instructions (2023 edition)
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4109.Duty of Disclosure by Seller’s Real Estate Broker to Buyer
A real estate broker for the seller of property must disclose to the buyer
all facts known to the broker regarding the property or relating to the
transaction that materially affect the value or desirability of the
property. A broker must disclose these facts if the broker knows or
should know that the buyer is not aware of them and cannot reasonably
be expected to discover them through diligent attention and observation.
The broker does not, however, have to disclose facts that the buyer
already knows or could have learned with diligent attention and
observation.
New December 2013; Revised May 2020
Directions for Use
This instruction should be read after CACI No. 400, Negligence - Essential Factual
Elements, if a seller’s real estate broker’s breach of duty of disclosure to the buyer
is at issue. A broker’s failure to disclose known material facts to the buyer may
constitute a breach of duty for purposes of a claim for negligence. Causation and
damages must still be proved. This instruction may also be used with instructions in
the Fraud and Deceit series (CACI No. 1900 et seq.) for a cause of action for
misrepresentation or concealment. (See Holmes v. Summer (2010) 188 Cal.App.4th
1510, 1528 [116 Cal.Rptr.3d 419].)
For an instruction on the fiduciary duty of a real estate broker to the broker’s own
client, see CACI No. 4107, Duty of Disclosure of Real Estate Broker to Client. For
an instruction on the duty of the seller’s real estate broker under Civil Code section
2079 to conduct a visual inspection of the property and disclose to the buyer all
facts materially affecting the value or desirability of the property that an
investigation would reveal, see CACI No. 4108, Failure of Seller’s Real Estate
Broker to Conduct Reasonable Inspection - Essential Factual Elements.
Sources and Authority
• “ ‘[W]here the seller knows of facts materially affecting the value or desirability
of the property which are known or accessible only to him and also knows that
such facts are not known to, or within the reach of the diligent attention and
observation of the buyer, the seller is under a duty to disclose them to the buyer.
[Citations.]’ When the seller’s real estate agent or broker is also aware of such
facts, ‘he [or she] is under the same duty of disclosure.’ A real estate agent or
broker may be liable ‘for mere nondisclosure since his [or her] conduct in the
transaction amounts to a representation of the nonexistence of the facts which he
has failed to disclose [citation].’ ” (Holmes, supra, 188 Cal.App.4th at pp.
1518-1519, original italics, internal citations omitted.)
• “Even in the absence of a fiduciary duty to the buyer, listing agents are required
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to disclose to prospective purchasers all facts materially affecting the value or
desirability of a property that a reasonable visual inspection would reveal. And
regardless of whether a listing agent also represents the buyer, it is required to
disclose to the buyer all known facts materially affecting the value or desirability
of a property that are not known to or reasonably discoverable by the buyer.”
(Horiike v. Coldwell Banker Residential Brokerage Co. (2016) 1 Cal.5th 1024,
1040 [210 Cal.Rptr.3d 1, 383 P.3d 1094].)
• “The real estate agent or broker representing the seller is a party to the business
transaction. In most instances he has a personal interest in it and derives a profit
from it. Where such agent or broker possesses, along with the seller, the
requisite knowledge . . . , whether he acquires it from, or independently of, his
principal, he is under the same duty of disclosure. He is a party connected with
the fraud and if no disclosure is made at all to the buyer by the other parties to
the transaction, such agent or broker becomes jointly and severally liable with
the seller for the full amount of the damages.” (Lingsch v. Savage (1963) 213
Cal.App.2d 729, 736 [29 Cal.Rptr. 201], footnote omitted.)
• “A breach of the duty to disclose gives rise to a cause of action for rescission or
damages.” (Alfaro v. Community Housing Improvement System & Planning
Assn., Inc. (2009) 171 Cal.App.4th 1356, 1383 [89 Cal.Rptr.3d 659].)
• “The ‘elements of a simple negligence action [are] whether [the defendant] owed
a legal duty to [the plaintiff] to use due care, whether this legal duty was
breached, and finally whether the breach was a proximate cause of [the
plaintiff’s] injury. [Citations.]’ We have already stated that the buyers alleged
facts sufficient to impose a legal duty on the brokers. Furthermore, they have
alleged facts sufficient to show a breach of that duty. Finally, the buyers alleged
that the breach caused them harm. In short, the buyers stated facts sufficient to
constitute a cause of action on a negligence theory. Our cursory analysis of this
one theory is enough to demonstrate that the trial court erred in sustaining the
brokers’ demurrer without leave to amend, but is not meant to preclude the
buyers’ pursuit of their other [fraud] theories.” (Holmes, supra, 188 Cal.App.4th
at p. 1528, internal citation omitted.)
• “Despite the absence of privity of contract, a real estate agent is clearly under a
duty to exercise reasonable care to protect those persons whom the agent is
attempting to induce into entering a real estate transaction for the purpose of
earning a commission.” (Holmes, supra, 188 Cal.App.4th at p. 1519.)
• “[A] seller’s agent has no affirmative duty to disclose latent defects unless the
agent ‘also knows that such facts are not known to, or within the reach of the
diligent attention and observation of the buyer.’ ” (Peake v. Underwood (2014)
227 Cal.App.4th 428, 445 [173 Cal.Rptr.3d 624], original italics.)
• “[W]hen a real estate agent or broker is aware that the amount of existing
monetary liens and encumbrances exceeds the sales price of a residential
property, so as to require either the cooperation of the lender in a short sale or
the ability of the seller to put a substantial amount of cash into the escrow in
BREACH OF FIDUCIARY DUTY CACI No. 4109
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order to obtain the release of the monetary liens and encumbrances affecting
title, the agent or broker has a duty to disclose this state of affairs to the buyer,
so that the buyer can inquire further and evaluate whether to risk entering into a
transaction with a substantial risk of failure.” (Holmes, supra, 188 Cal.App.4th at
pp. 1522-1523.)
• “[W]e do not convert the seller’s fiduciary into the buyer’s fiduciary. The seller’s
agent under a listing agreement owes the seller ‘[a] fiduciary duty of utmost
care, integrity, honesty, and loyalty . . . .’ Although the seller’s agent does not
generally owe a fiduciary duty to the buyer, he or she nonetheless owes the
buyer the affirmative duties of care, honesty, good faith, fair dealing and
disclosure, as reflected in Civil Code section 2079.16, as well as such other
nonfiduciary duties as are otherwise imposed by law.” (Holmes, supra, 188
Cal.App.4th at p. 1528, internal citation omitted.)
• “Real estate brokers are subject to two sets of duties: those imposed by
regulatory statutes, and those arising from the general law of agency.” (Coldwell
Banker Residential Brokerage Co. v. Superior Court (2004) 117 Cal.App.4th
158, 164 [11 Cal.Rptr.3d 564].)
• “In enacting section 2079 [see CACI No. 4108], the Legislature did not intend to
preclude a real estate agent’s liability for fraud. However, because a seller’s
agent has no fiduciary relationship with a buyer, the courts have strictly limited
the scope of an agent’s disclosure duties under a fraudulent concealment theory.”
(Peake, supra, 227 Cal.App.4th at p. 444, internal citation omitted.)
• “The primary difference between the disclosure obligations of an exclusive
representative of a seller and a dual agent representing the seller and the buyer is
the dual agent’s duty to learn and disclose facts material to the property’s price
or desirability, including those facts that might reasonably be discovered by the
buyer.” (Horiike, supra, 1 Cal.5th at pp. 1040-1041.)
Secondary Sources
5 Witkin, Summary of California Law (11th ed. 2017) Torts, § 914
12 Witkin, Summary of California Law (11th ed. 2017) Real Property, §§ 487, 489
Greenwald & Asimow, California Practice Guide: Real Property Transactions, Ch.
2-C, Broker’s Relationship And Obligations To Principal And Third Parties,
¶¶ 2:164, 2:172 (The Rutter Group)
California Real Property Sales Transactions (Cont.Ed.Bar 4th ed.) §§ 2.132-2.136
3 California Real Estate Law and Practice, Ch. 63, Duties and Liabilities of Brokers,
§§ 63.20-63.22 (Matthew Bender)
10 California Forms of Pleading and Practice, Ch. 103, Brokers, § 103.31 (Matthew
Bender)
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© Judicial Council of California.
